What are HUD-1 statements used for?

HUD-1 statements are primarily used to itemize all costs and fees associated with a real estate transaction. They serve as a detailed summary of the financial aspects of buying or selling a property, showing all the parties involved, the transactions, and the actual costs incurred, including closing costs. This comprehensive breakdown allows both buyers and sellers to understand exactly what they are paying for and can help ensure transparency throughout the process.

Rather than focusing on property valuations for taxation or documenting mortgage insurance details, the purpose of the HUD-1 statement is narrowly tailored to clarify the financial obligations in a real estate closing. It provides an essential tool for buyers and sellers to review before finalizing the transaction, ensuring they are aware of all associated costs. Additionally, neighborhood demographics, while important in real estate transactions, are not part of what the HUD-1 statement addresses.